Joint Venture – 7 Tips to get your Joint Venture Project Started

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Joint venture, we have all heard of this term one time or another, but what exactly is a
joint venture? In lay-man’s terms a joint venture is wherein two or more parties build a
relationship, they enter into some agreement to work towards a common goal.

Although they have the same goals these parties remain separate and distinct from each
other. Joint ventures take place across most industries where companies may combine
forces for a specific project but may even be competitors for others.

A joint venture is truly a great and proven way to access millions of potential partnerships
across countries. Moreover joint venture is indeed a great way to combine efforts,
resources, and ideas which will eventually increase sales for both sides of the party.

The sales of your online business are more likely to increase with an increase in the
number of people you reach through your joint venture effort.

If you are an online entrepreneur and you are looking for new strategies to make your
business a success, a joint venture may be in the cards and just the thing to create that
success.

Keep in mind that joint ventures are business partnerships that require cooperation and
trust. However, they do not have to be permanent nor does a business owner need to share
all his or her secrets to take advantage of a joint venture partnership.

Here are some advantages a joint venture brings to your online business:

1. Joint venture enables you to access bigger markets. A strategic joint venture partnership
can provide access to larger customer bases and geographical markets.

Say for example you are running an online business that specializes in promotional items
like shirts, coffee mugs, pens, and other merchandise with company logos. By forming a
joint venture with a business consultant who has a wide-range of business contact network,
you can supply them with unique promotional items and gain access to a large catalogue
mailing list.
There is a huge marketing possibility with a joint venture. Since marketing and promotion
are always something you need to focus on for your business, getting otherwise
inaccessible market taps can help your business grow.

2. Joint ventures give your business longer marketing efforts. The beauty of a joint venture
is that not only will it enable you to access a larger market it also gives you a chance to
extend your marketing efforts.

If you are just starting up your online business then you may not have the budget yet for
advertisements, however if you are part of a strategic joint venture you would be able to
gain new marketing channels. Additionally, a joint venture strategy may give you more
direct access to decision makers.

3. Joint venture gives you access to new resources / technology. Every online entrepreneur
dreams of expanding his business with the use of technology.

However have you ever thought of rather than trying to obtain venture capital for
technology expansion, a joint venture is more appropriate and practical. When you loan
money from the back or borrow from someone else, you have the obligation to pay it back
before you recognize any considerable profit.

But if we use the resources and technology already utilized by a joint venture partner, you
could build business and raise revenues faster by sharing the profits.

4. Joint venture gives you access to a bigger and longer prospect list. As of the moment
how big is your current opt-in list?

Is there any way that you can expand and make your list grow? If you have a bigger opt-in
list will that mean you get bigger chances of increasing your profits?

A joint venture has the ability to broaden and grow your opt-in list in a lot of ways. If you
are list leveraging with a partner, then anyone who responds visits your website, or makes
a purchase is added to your opt-in list.

Doing cross promotions have the same list building capabilities. Say for example you went
ahead and posted an ad for your partner in your newsletter and they post an ad for you,
then eventually everyone on their list that responds to your ad is now on your opt-in list.
5. Joint ventures promote better customer relationships. As an entrepreneur your credibility
is important, and in offering your customers a new opportunity, a new product, or a new
service with a reputable partner gives you instant credibility.

Your customers also see you as someone that thinks about his customers and takes the
time and effort to find and present quality opportunities to them.

When you offer your customers an excellent product or service, you not only increase your
credibility with them, you increase the likelihood that they are going to buy from you
again.

6. A joint venture presents you with an opportunity to gain capacity and expertise. When
you enter into a joint venture always remember that you should be able to gain as much
from the other company as they can from you. This is one of the biggest advantages of a
joint venture that should not be overlooked.

7. When you enter a joint venture any risk that you might get into is shared by you and the
other party. Since the liability is shared there is less pressure on your part, and likewise the
other group as well.

Also the flexibility in a joint venture can make your life a lot easier. Like what I have said
earlier a joint venture is good for as long as your contract stands.

The life span of the agreement can be just enough to cover what you want as a joint
venture is not a life time partnership. A joint venture is joining forces for one particular
project and not putting two companies together forever and ever.

http://www.dynamicbusiness.com.au/articles/articles-export/what-is-a-joint-
venture.html

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Business Services Industry

International Joint Ventures with Pacific Rim Partners

The joint venture with a company in Japan or China is an attractive way for an American
company to enter those markets. The technical nature of this type of agreement, however,
demands in-depth knowledge of the legal and social issues involved.

With frantic competition in today's international marketplace, many American companies

are turning to the joint venture as a proven method of attracting capital, technology, and
new markets. This article will examine international joint ventures involving American,
Japanese, and Chinese companies. In addition to the legal aspects, it will also address
some of the cultural issues involved, with particular emphasis on the role of the lawyer in
structuring and negotiating the joint venture.

THE RATIONALE FOR THE INTERNATIONAL JOINT VENTURE

The underlying reasons for the international joint venture go beyond survival in the
international marketplace or even an interest in pursuing growth opportunities. The joint
venture may be the only means of gaining market access to countries whose nontariff
barriers and import restrictions make direct exporting difficult if not impossible. An
American company may wish to gain access to materials of strategic importance or to
secure a supply of components at cheaper prices and from more reliable suppliers than
currently available. China and Japan are well known for posing governmental restrictions
on foreign investment. This makes joint ventures a viable option for penetrating these
markets. In the same vein, especially with respect to China, the international joint venture
provides an opportunity for an American company to market directly to the Chinese
government through local partners. With the growing number of Japanese original
equipment manufacturers located in the United States, a joint venture with a Japanese auto
components supplier often provides the American with an opportunity to sell to the OEM.

The international joint venture also represents an opportunity for the American partner to
acquire technology and marketing expertise, as well as to improve managerial and sales
capabilities. And an international joint venture, especially with the Japanese, can minimize
risks by allowing both partners to share expenses. An emerging trend has been for small
and medium-sized partners to combine talents and resources, allowing economies of scale
in manufacturing, distribution, and research and development. The international joint
venture involving potential competitors allows each partner to forge strategic alliances and
international marketing plans designed to increase market share and prevent in-roads in
their own markets or future markets. Finally, the international joint venture can help both
partners bring new technology to market more quickly and penetrate distribution channels
in new markets that might otherwise be closed.
These examples are discussed here not because the international joint venture with Japan
or China is an inappropriate strategic decision. They are instead to serve as reminders to
the American company contemplating a joint venture to carefully evaluate long-term
consequences in relation to its objectives.

STRUCTURING THE INTERNATIONAL JOINT VENTURE

There is no clearly accepted definition of a joint venture. The common understanding of

the term is that it is a form of association between two or more individuals or businesses to
accomplish certain business objectives. The true joint venture consists of three essential
elements: a separate legal entity; joint ownership of the legal entity by the joint venture
partners; and joint management by the partners of the separate legal entity.

The joint venture is a flexible method of association that can be utilized in a variety of
situations. Because of its somewhat amorphous nature, the joint venture has become a
catchall term to describe all cooperative business arrangements (except the corporate
acquisition) involving foreign companies. An effective international joint venture requires
the partners to agree as to their fundamental objectives; to provide specifically for the
necessary transfer of technology, proprietary rights, or resources that are expected to occur
naturally in a joint venture context; and to develop appropriate strategies as well as
business and legal structures. As with an acquisition, there is always a second layer of law
to consider that only adds to the complexity of the analysis from a lawyer's perspective.

The objective of the lawyer in negotiating and structuring a joint venture is to determine
the legal arrangement which best satisfies the venture partners. Obviously, one cannot
expect to find a structure that will satisfy all of the objectives of the partners. By analyzing
a situation carefully and in detail, however, the experienced lawyer can develop an optimal
joint venture plan.

Joint ventures between American and Japanese companies have many similarities with
joint ventures between American and Chinese companies, although the arrangement in the
latter case is with a foreign government. Notwithstanding the similarities, there are some
notable differences when a private company enters into a joint venture with a foreign
government. First, the negotiations tend to be much more difficult, because governmental
bureaucracies are frequently concerned with issues unrelated to the fundamental business
concerns of the joint venture. Secondly, joint ventures with governmental entities
inherently involve multiple levels of approvals and consents. Third, there tends to be much
less flexibility on the part of a sovereign state. Fourth, dealing with a foreign government
can be something of a mixed blessing. For example, it may be possible to obtain
concessions and agreements which could not be obtained from an independent individual
or business entity. However, the American company is also much more subject to
unilateral negotiation by the sovereign state and will have limited recourse in the event of
a breach of the joint venture agreement because of the doctrine of sovereign immunity.
Thus, American companies considering a joint venture with the Chinese need to weigh
carefully these risks and plan for them in an effective manner.

Strategy, structure, and performance of MNCs in China

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